Fuel price drop – but energy bills to hit £2,500
Decades-high inflation eased slightly in August as fuel prices dropped, but the cost of food is rising at record rates, new data shows.
The Office for National Statistics (ONS) said Consumer Prices Index inflation reached 9.9% in the year to August, down from 10.1% the previous month – a 40-year high.
Experts had expected the figure to be unchanged between the two months.
The ONS said the biggest downward pressure on the inflation rate was the price of motor fuels, which has been falling in recent months.
The 6.8% drop in fuel prices was the highest since between March and April 2020, the early days of the pandemic when oil prices briefly went negative on some markets.
But food prices are continuing to rise, by 13.1% in the 12 months to August, the highest rate for exactly 14 years.
And while it eased slightly last month, UK inflation is still the highest among all G7 countries.
Inflation figures are unlikely to have peaked yet either, rises are expected again later this year.
In October energy bills will spike from £1,971 to £2,500 for the average household.
The Government’s support for households will help somewhat, taking bills down from £3,549.
The National Institute of Economic and Social Research forecast that inflation will peak at around 11.5% in the first quarter of next year, and come back down to around 2% towards the end of 2024.
George Lagarias, chief economist at accountancy Mazars, warned that “it will take months of lower oil for end-consumer prices to meaningfully come down again; inflation may well remain a central theme until at least the end of the year.
l For details of house price rises, see page 13